DAOL Investment & Securities noted that last week the S&P 500 automotive index recorded a loss of 3.1%, resulting in a nearly flat performance compared to the 2.6% decline of the S&P 500 index.
Researcher Yoo Ji-woong of DAOL Investment & Securities analyzed, "The tax cut plan passed by the House last Thursday includes provisions to abolish the electric vehicle tax credit of $7,500 (about 10 million won) by early 2026 and maintain a plan to reduce the advanced manufacturing tax credit starting in 2032. Market potential demanders may rush to make early purchases, depending on whether it passes the Senate."
However, he added, "The likelihood of it passing in the Senate in June may not be high given that the Democratic Party is the majority party."
In South Korea, Hyundai Motor, Kia, and Hyundai Mobis each fell 7.2%, 5.3%, and 5.1%, respectively, showing weakness compared to the KOSPI index, which declined by 1.3%. The three secondary battery corporations, including LG, Samsung, and SK, also recorded losses of 7.7%, 2.7%, and 7.2%, reflecting market concerns about the tax cut plan, including the abolition of the U.S. electric vehicle tax credit.
However, there is an analysis that secondary battery corporations are expected to see large-scale demand based on the range-extended electric vehicle (EREV) strategy of finished vehicle manufacturers. A range-extended electric vehicle is a type of electric vehicle that uses an engine, where the engine acts as a generator to charge the battery rather than generate power.
Researcher Yoo noted, "EREV can drive solely on battery power even in sections where high-speed driving is required without engine intervention," adding that "in this case, the battery demand will exceed 50 kWh, rather than the traditional hybrid car battery size of 1-2 kWh," and stated that "there is no dependence on subsidies, which can allow a huge market to form quickly."